Premium
Asymmetric Adjustment Costs, Asymmetric Pricing and Employment: Evidence from the UK
Author(s) -
Holly Sean,
Turner Paul
Publication year - 2001
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/1467-9485.00185
Subject(s) - economics , dual (grammatical number) , function (biology) , econometrics , multivariate statistics , production (economics) , microeconomics , exploit , information asymmetry , mathematics , art , statistics , literature , computer security , computer science , evolutionary biology , biology
This paper uses an asymmetric multivariate model to investigate asymmetries in employment and pricing behaviour by firms. This generalises the approach of Granger and Lee (1989) and also exploits the cross equation restrictions on the equations for prices and employment implied by a restricted cost function—the dual to a Cobb‐Douglas production function. Our results suggest that both prices and employment respond asymmetrically to shocks to costs and demand.